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More Surprises on Floating Storage

April 3, 2020

In the past two weeks we examined the economics of floating storage, looking at VLCCs and crude storage as well as LR2 tankers and gasoline storage.  This week we are going to take a final look at what led to this surge in floating storage as well as the signs of a possible reversal.  We are referring of course to yesterday’s tweet by US President Donald Trump, who claimed that an agreement for production cuts between Saudi Arabia and Russia may be close.  This would not be of much importance if it wasn’t followed by a truly unprecedented ...

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LR2 Floating Storage: Almost There

March 27, 2020

Last week we examined the possibilities and conditions regarding floating storage for crude oil.  Increased supply from OPEC and the complete collapse of demand for crude oil and oil products due to the coronavirus has created potential opportunities not only for crude storage but also for clean petroleum products on LR2 tankers.  For this week, we look at that sector. 

With almost 3 billion people on stay at home orders worldwidethe first products to experience fall in demand and prices are gasolines and jet fuels -with some sources reporting that airlines are already looking for jet fuel storage ...

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Does Floating Storage Make Sense

March 20, 2020

Just a few days ago, Saudi Arabia’s fallout with Russia had the former increasing oil production to over 12 million b/d for April and discounting its official selling price (OSP) for crude in order to gain market share. As a result, oil prices retreated to levels not seen in many years and the markets started showing a contango structure.  The promise of a cheap current contract and a higher future price create the ideal scenario for someone who has the capacity to store product for future or sell it later. 

Floating storage activity could be ...

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VLCCs Rejoice in Oil Market Chaos

March 13, 2020

In the beginning of March, OPEC and the countries it is collaborating with (known as OPEC+) met in Vienna to discuss crude oil production going forward.  After what was reported as marathon talks, the outcome of the meeting was entirely unexpected.  Russia, the largest member and producer of OPEC+ allied countries and Saudi Arabia, the de facto leader of OPEC failed to reach an agreement on the actions of the organization going forward.  The disagreements became so pronounced that in an entirely surprising move, Saudi Arabia essentially dissolved OPEC+ and announced that after the current production cuts expire at the ...

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A Quick Look Into the Proposed USG Terminals

March 6, 2020

Since 2018 and along with the significant gains in US crude oil production, there have been announcements regarding the development of terminals in the US Gulf capable of loading VLCC tankers.  These proposed investments seem like a natural outcome following the boom in crude oil exports from the US.  At the moment there is only one operational terminal that can load the large ships (Louisiana Offshore Oil Port -or LOOP). Additional VLCCs depend on smaller ships for lightering operations, which allow them to receive full cargo.

According to the latest available information, there are at least seven proposed docks or ...

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